Header picture source: Pexel
This article was not reviewed by the Monetary Authority of Singapore (MAS) or any other relevant authorities.
You might be wondering, “I’m still so young, why must plan for retirement already? Still so far!”
Well, as the famous saying goes, “if you fail to plan, you plan to fail”.
The earlier you start planning for your retirement, the easier it is for you to enjoy your retirement years later.
Would you want to be working till you’re old and frail, living paycheck to paycheck and then regretting that you should have planned for your retirement back then?
As saving money requires time (duh!), starting early also offers you the opportunity to leverage on compounding interests!
So mai tu liao, (don’t waste time) let’s understand how to get started on your retirement plan!
1. Decide when you want to retire
To get the ball rolling, there are about 4 things you could take into consideration!
1. The official retirement age in Singapore is 62 years old.
2. Based on our latest report, our life expectancy (statistical age you are expected to live until) in Singapore is around 82 years old for males, and 86 years old for females.
3. At 55 years old, you are eligible to withdraw money from your Central Provident Fund (CPF) retirement account.
4. As we grow older, our health will inevitably become a concern. As a general gauge, our health life expectancy (expected number of years of good health) is around 73 years old for males, and 75 years old for females. Aforementioned, this is a general gauge, so do also take note of your personal medical needs that you might require in the future!
Knowing these 4 points could help you roughly decide when you want to retire as you consider what sort of lifestyle you want presently and in the future. As there are certainly many other factors that should be considered and discussed, you could engage a financial advisor here to help you with the nitty gritty!
2. Determine your monthly expenses
As you consider the sort of lifestyle you want to lead in your retirement years, you would also need to consider how much your monthly expenses should be in order to live out your desired lifestyle.
Besides your lifestyle, expenses on your health, and debts would also need to be considered.
Based on a 2019 study, a single 65 years old elderly would need at least $1,379 a month to get by in Singapore.
3. Assess your current financial situation
After having a direction you want to work towards for retirement, it would be good to look at your current financial situation to see how you could achieve your goals.
Are you on track to reaching your retirement goals? How much would you need if you want to retire at XX years old? How much of your current monthly income should be allocated to your retirement savings?
I know, I know. These are difficult and mind-boggling questions to answer! Fret not, you could always reach out for help here if you need someone to guide you through this!